We give Microsoft credit for finally understanding that what works on a console won't necessarily appeal to PC gamers. First, it stripped away the much-derided, fee-based Games for Windows Live Gold membership level. Now the entire Games for Windows Live interface has received an update. The Xbox 360-style "blade" interface is gone, replaced by a fully mouse-driven drop-down menu system. If it only worked as well as it should.
To clarify, you're not intended to download a GFW Live client for your PC, at least not yet (technically you can). For the moment, you're instead supposed to launch any GFW Live-enabled game, log in to the Live service, and from there follow the update prompt. Microsoft says a separate downloadable client is coming, along with a PC gaming-oriented Marketplace that will sell updated content for GFW Live-supported games.
For now, you can use the GFW Live service to socialize and find people to play with from your Windows or Xbox Live friends lists. It also includes an achievement system, as well as an update monitor, which can be both a blessing and a curse. For example, the recent Fallout 3 patch has its share of problems, but GFW Live requires you to update, or else it will log you out (the same is true of Valve's Steam service, GFW Live's primary competition).
We also had problems with our mouse cursor tracking properly across the Live screens in Fallout 3 (other Fallout 3 users have reported the same issue). We weren't able to try other GFW Live games, so we have no word on whether the tracking issues are universal.
The saving grace for GFW Live is that you don't have to use it. If you're annoyed by it, you can simply opt out and find your friends and game patches through traditional channels. You may be cut-off from downloadable content, but at least you don't lose anything from core gameplay.
Even if it's not flawless, Games for Windows Live 2.0's interface is a marked improvement over the original version. It also lays the groundwork for what Microsoft hopes will one day become a full-fledged PC gaming marketplace, potentially with full game downloads. Given the success of Xbox Live for the Xbox 360, it's certainly understandable that Microsoft would want to duplicate that experience on the PC. We daresay it might even be good for PC gaming as a whole if Microsoft eventually gets it right.